Newcomer’s Guide: Retiring in Hawaiʻi

Plan now for your retirement in paradise.

By American Savings Bank

Published: 2016.05.02 12:49

Scott Palmer, Director at American Insurance & Investments.

Is retiring in Hawaiʻi on your bucket list? You're not alone. For many, the Aloha State is the ultimate dream retirement location. So, what do you need to turn that dream into reality? A plan, a good financial advisor, a range of investments, a budget and hopefully, great health. Scott Palmer, director at American Insurance & Investments, shares his expertise.

"It’s never too early to start planning for retirement," he says. "A college student working full or part time may be able to contribute up to $5,500 of earned income, which is the maximum amount for a person under the age of 50. If that money earned 6 percent for the next 48 years until the traditional retirement age of 68, it would be worth $85,000." By adding another $5,000 every year until age 68—assuming a 6 percent rate of return—the funds would grow to $1,339,686 (unadjusted for inflation, according to bankrate.com).

You can start saving early with any type of tax-free, tax-deferred, or tax-efficient investment vehicle, but Palmer suggests taking a close look at the Roth IRA; all withdrawals are tax free, provided you're at least 59-and-a-half years old and have owned the account for five years.

If you are younger, be sure to invest at least the minimum percent required to your company 401k plan to take advantage of your employer match. The match is essentially free money that the company contributes to your plan. As your working years continue, max the 401k contribution as soon as you can. The same applies to other plans such as 403bs, 457s, or any other employer-sponsored plan.

For some, retirement will come much later in life. If that’s the case for you, there are options. You can continue to work beyond retirement, reduce expenses, stay healthy, and of course, save more. Take the time to consider more aggressive investments; your risk tolerance, economic environment, market outlook and your ability to stay employed can make all the difference. Talking to a financial expert will help tailor your solutions and provide a clearer view of your retirement picture.

Basic Steps to Retirement

1. Determine what your retirement goals are and find an excellent financial advisor. Interview as many advisors as necessary to understand what they do and how they do it. Ask for the performance of their models, their licensing, industry designations, length of service, how they are paid, academic background, number of clients, industry complaints and investment philosophy.

2. Work backward to discover the types of investments and performance that you will need to reach your goals. For example, your financial needs might be modest if your goal is an affordable condo near family, so you can help with the day care for your grandchildren.

3. Maximize your social security benefits. There are many ways to do this; take the time to look for seminars in your community and talk with a financial advisor.

4. Understand healthcare costs. Look at ways to insure against the financial and emotional devastation that can challenge even the best of families. Whether it’s long-term care, adult day care, temporary care or senior care, there are many options that can cover unforeseen health challenges.

5. Know your expenses in retirement and follow a budget. Don’t forget, even your income during retirement is taxable. Retirement doesn’t have to be difficult, but don’t wait until your final paycheck to start planning.